Ernst Company's balance sheet shows total liabilities of $32,500,000, total stockholders' equity of $8,125,000, and total assets

Question:

Ernst Company's balance sheet shows total liabilities of $32,500,000, total stockholders' equity of $8,125,000, and total assets of $40,625,000.

Required:

1. Calculate the debt ratio.

2. Calculate the debt-to-equity ratio.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...